It only took a terse announcement from Ottawa that it will suspend providing advance tax rulings to companies considering converting to an income trust for the trust mania to turn into panic. In two days since the ruling, CI Funds (TSX: CIX), CanWest Global (TSX: CGS.SV), GMP Capital Corp (TSX: GMP), all companies that intended to convert to income trusts, fell 11%, 5.6% and 8.3% respectively.
My portfolio holdings AGF Management fell 8.4% and BCE dropped 6.3%, as investor hopes that the companies will either fully or partially convert to income trusts were dashed. As Derek DeCloet points out in today’s Report on Business, existing income-trust holders need to be cognizant of the risks involved in the sector. If Ottawa decides to tax the sector, high-flying business trusts are likely to come crashing down.
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1 response so far ↓
1 The Dividend Guy // Sep 23, 2005 at 12:19 am
Once again, our wonderful government thinking that they know what is best for all Canadians…however, I think we need to wait and see what happens in the next few months as we may be having an election soon and existing trusts will be fighting hard to keep things as is.
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